Adobe Reports Record Quarterly and Annual Revenue
Company Drives Strong Adobe Creative Cloud and Adobe Marketing Cloud Adoption in Fiscal 2012
Adobe achieved revenue in Q4 FY2012 of $1.153 billion, exceeding its targeted range of $1.075 billion to $1.125 billion. During the quarter, the Company continued to accelerate adoption of Adobe® Creative Cloud™ as it migrates to a subscription model. Adobe also achieved record Adobe Marketing Cloud and Document Services revenue during the fourth quarter.
For fiscal year 2012, Adobe achieved record revenue of $4.4 billion.
Fourth Quarter Financial Highlights
Diluted earnings per share were $0.44 on a GAAP-basis, and $0.61 on a non-GAAP basis.
Operating income was $307.8 million and net income was $222.3 million on a GAAP basis. Operating income was $414.7 million and net income was $307.9 million on a non-GAAP basis.
Cash flow from operations was $473.7 million.
Deferred revenue grew by $59.3 million to a record $619.6 million.
Adobe added approximately 10,000 Creative Cloud subscriptions per week during the quarter, versus the addition of 8,000 subscriptions per week in the third quarter.
In Document Services, which includes the Adobe Acrobat® product family, Adobe also achieved record revenue of $210.2 million during the quarter.
Adobe Marketing Cloud achieved record quarterly revenue of $220.4 million, which represents 32 percent year-over-year growth.
A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.
Fiscal Year 2012 Financial Highlights
Adobe achieved record revenue of $4.404 billion. Annual GAAP diluted earnings per share for fiscal 2012 were $1.66, and annual non-GAAP diluted earnings per share were $2.35.
Annual operating income was $1.180 billion and net income was $833 million on a GAAP basis. Annual operating income was $1.597 billion and net income was $1.183 billion on a non-GAAP basis.
Adobe generated $1.5 billion in cash flow during the year.
Creative Cloud paid subscriptions grew to 326,000 as of the end of the year, with exiting annualized recurring revenue of $153 million for the Creative business.
Document Services achieved record annual revenue of $786 million.
Adobe Marketing Cloud achieved a record $777 million in reported annual revenue, representing 35 percent year-over-year growth.
The company repurchased 11.5 million shares during the year, returning approximately $372 million of cash to stockholders.
"We beat our Creative Cloud subscription goals and established Adobe Marketing Cloud as the leader in the exploding category of Digital Marketing during fiscal 2012," said Shantanu Narayen, president and chief executive officer, Adobe. "In fiscal 2013 we intend to accelerate our pace of innovation, and drive integration between Creative Cloud and Adobe Marketing Cloud."
"We're driving migration to a subscription model in our Creative business faster than we predicted a year ago, and we are confident fiscal 2013 will be the pivotal year for the transition," said Mark Garrett, executive vice president and chief financial officer, Adobe. "This will yield a stronger, more predictable recurring revenue model with higher long-term revenue growth."
Adobe to Webcast Earnings Conference Call
Adobe will webcast its fourth quarter and fiscal year 2012 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: www.adobe.com/ADBE. The company will discuss financial targets for the first quarter of fiscal 2013 as well as fiscal year 2013 on its Q4 and FY2012 earnings call. A copy of Adobe management's prepared remarks, including financial targets and conference call slides, has been posted to Adobe's investor relations website in advance of the conference call for reference.
A reconciliation between GAAP and non-GAAP financial targets is also provided on the website.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including those related to the transition of our business as we migrate to a subscription model, increases in recurring revenue, long-term revenue growth and our ability to continue to innovate and execute against our strategy in our key growth areas and drive integration between those areas, which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure to develop, market and distribute products and services that meet customer requirements, introduction of new products and business models by competitors, failure to successfully manage transitions to new business models and markets, including our increased emphasis on a cloud and subscription strategy, fluctuations in subscription renewal or upgrade rates, continued uncertainty in economic conditions and the financial markets, difficulty in predicting revenue from new businesses and the potential impact on our financial results from changes in our business models, and failure to realize the anticipated benefits of past or future acquisitions.
For a discussion of these and other risks and uncertainties, please refer to Adobe's Annual Report on Form 10-K for the fiscal year ended December 2, 2011 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 2, 2012, June 1, 2012 and Aug. 31, 2012.
The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe's Annual Report on Form 10-K for our year ended Nov. 30, 2012, which Adobe expects to file in Jan. 2013.
Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.
About Adobe Systems Incorporated
Adobe is changing the world through digital experiences. For more information, visit www.adobe.com.
© 2012 Adobe Systems Incorporated. All rights reserved. Adobe, the Adobe logo, Creative Cloud and Acrobat are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. All other trademarks are the property of their respective owners.
Condensed Consolidated Statements of Income
(In thousands, except per share data; unaudited)
Three Months Ended
Services and support
Cost of revenue:
Services and support
Total cost of revenue
Research and development
Sales and marketing
General and administrative
Restructuring and other related charges
Amortization of purchased intangibles
Total operating expenses
Non-operating income (expense):
Interest and other income (expense), net
Investment gains (losses), net
Total non-operating income (expense), net
Income before income taxes
Provision for income taxes
Basic net income per share
Shares used to compute basic net income per share
Diluted net income per share
Shares used to compute diluted net income per share
Condensed Consolidated Balance Sheets
(In thousands, except par value; unaudited)
Cash and cash equivalents
Trade receivables, net of allowances for doubtful accounts of $12,643 and $15,080, respectively
Deferred income taxes
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Purchased and other intangibles, net
Investment in lease receivable
LIABILITIES AND STOCKHOLDERS' EQUITY
Capital lease obligations
Income taxes payable
Total current liabilities
Debt and capital lease obligations
Income taxes payable
Deferred income taxes
Preferred stock, $0.0001 par value; 2,000 shares authorized
Common stock, $0.0001 par value
Accumulated other comprehensive income
Treasury stock, at cost (106,702 and 109,294 shares, respectively), net of reissuances
Total stockholders' equity
Total liabilities and stockholders' equity
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)
Three Months Ended
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion
Stock-based compensation expense
Unrealized investment gains
Changes in deferred revenue
Changes in other operating assets and liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases, sales and maturities of short-term investments, net
Purchases of property and equipment
Purchases of long-term investments, intangibles and other assets, net of sales
Acquisitions, net of cash
Net cash used for investing activities
Cash flows from financing activities:
Purchases of treasury stock
Reissuance of treasury stock
Repayment of debt and capital lease obligations
Excess tax benefits from stock-based compensation
Net cash used for financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents